SBA CONTRACT CAPLineProgram

SBA CONTRACT CAPLine Program

SBA Contract CAPLine Program

? Eligibility- An SBA "small business" is one that: ? Operated "for profit" ? Has a net worth of less than $15 million and ? Has annual average 2 year net profit of less than $ 5 million ? Meets other criteria per SBA regulations

? Maximum SBA loan amount is $5 million at one time (you can have multiple loans) ? Maximum SBA guaranty percentage is 85% to $150,000; 75% over $150,000 ? Maximum Interest rate ? P+2.25% to 12 months; P+2.75% over 12 months ? SBA Guaranty fee is .25% of guaranteed loan amount for loans up to 12 months; per SBA

schedule for loans longer than 12 months

? Interest only due during contract period unless progress payments outlined

Contract CAPLine - Eligibility

? Applicant must qualify under Standard 7(a) Loan Requirements and:

- Show history of profitable performance on similar contracts - Show ability to bid, accurately project costs and perform the specific work required

by the contract.

- Have financial capacity and technical expertise to complete contracts profitably and

on time

Contract CAPLines ? Use Of Proceeds

? Proceeds can be used to finance all costs related to the specific contract,

excluding profit.

? Contract CAPLine proceeds may NOT be used for:

- permanent working capital - to acquire fixed assets - to pay delinquent taxes - to refinance existing debt - to finance a contract in which significant performance has already begun - for change of ownership - floor plan financing - to cover any mark-up or profit - to finance the performance of another contract or sub-contract

Contract CAPLine Program - Collateral

? Assignment Of Contract Proceeds ? 1st Lien Position on Contract and Proceeds required, taken via UCC

Financing Statement & Security Agmt - Contracting authority notified in writing of the assignment and

agrees to assignment in writing - Assignment must be in place prior to first disbursement - Assignment to allow Lender to receive payments from a 3rd Party;

written acknowledgement required. - No additional collateral is required when Contract Proceeds are

pledged - Progress payments can be received and applied

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